China's middle class puts premium on quality

Beijing: There are two kinds of "made in China": made in China for export, and made in China to be palmed off on hapless consumers at home.

For years the gap in quality has been wide. Chinese consumers received the worst that "made in China" had to offer; all the good stuff ended up at Walmart.

But now Chinese consumers are what it's all about. Beijing wants an economy driven by domestic consumption, so pleasing buyers at home has taken on a priority.

About time. As the balance of consumer power shifts back to the motherland, Chinese consumers have responded by turning into some of the world's most demanding shoppers.

Everyone from grocers to handbag makers, mall developers to paint mixers, say Chinese consumers are ready and able to pay for world-class goods. Domestic and Western retailers can no longer get away with giving them second best.

China even seems to be losing its appetite for fakes. Counterfeit luxury goods, a hit with the girls in the Shanghai typing pool, are losing out to the real thing.

Chinese shoppers still like an extra dose of bling on everything, but as salaries and sophistication rise, they prefer their glitz genuine rather than fake.

Escada, the women's designer clothing group, has conducted a survey that found a steep drop in Chinese consumer willingness to buy fakes, from 31 per cent in 2008 to 12 per cent by 2010.

Fakes were fine when all the Chinese wanted was a logo to flash around.

But the country's middle-class is learning that there is more to life than showing off.

No one should expect China's counterfeit markets to disappear. But Max Magni, head of McKinsey's Chinese consumer goods practice in Shanghai, says the market for luxury fakes is growing much more slowly than the real thing, and Chinese consumers are getting harder to please.

This plays out in all sorts of markets. Until two or three years ago, Chinese people shopping for a tele-vision looked for clarity of sound and picture, and other basic attributes, he says. But now, the average Chinese consumer will not stop there. They will insist on pressing every button on the remote to make sure it does what they want it to do, and testing the screen to make sure it is non-glare.

"A lot of people in Eur-ope wouldn't even care about that," says Magni. He sees that attitude not just in rich cities like Shanghai but in many that most of us have never heard of.

Joining the bandwagon

Everyone is jumping on the safety bandwagon. Malls and real estate developers are trying to brand themselves as safe by asking impartial international quality inspection companies to verify that their lifts will not plunge or their walls fall down on shoppers.

"From fruit to paint, Chinese are willing to pay for something with a safety seal," said Shaun Rein, author of The End of Cheap China.

— Financial Times